Iowa

The Bottom Line

In the wake of the new federal tax law, Iowa has done a bit of tax reform of its own. For 2019, the changes are relatively modest:

An across-the-board rate reduction that reduces the top rate from 8.98% to 8.53%

A “decoupling” from federal law that means Iowans won’t be limited in how much local property taxes can be deducted from state returns.

In 2023, assuming state revenues hold up, income taxes will be further reduced, the alternative minimum tax repealed, and the Hawkeye state’s uncommon practice of allowing residents to deduct federal taxes from their state taxes will be repealed.

Sales Tax

6.0% state levy. Localities can add as much as 1%, and the average combined rate is 6.82%, according to the Tax Foundation.

Income Tax Range

Low: 0.36% (on up to $1,598 of taxable income)

High: 8.98% (on taxable income over $71,910) — for 2018.

In 2019: Low: 0.33% (on up to $1,628 of taxable income) High: 8.53% (on taxable income over $73,261) Iowa allows school districts to tax income as well. The average levy statewide is 0.22%, according to the Tax Foundation.

Property Taxes

Vehicle Taxes

Vehicles are subject to a one-time registration fee of 5% of the sales price.

Sin Taxes

Cigarettes: $1.36 per packSnuff: $1.19 per ounceOther tobacco products: 50% of the wholesale price, not to exceed $0.50 per cigar

Beer: $0.19 per gallon Wine: $1.75 per gallonLiquor: $13.07 per gallonIowa directly controls the distribution and sale of alcohol. Liquor tax is an estimate by the Distilled Spirits Council of the United States and published by the Tax Foundation.

Travel Taxes

Hotel: In addition to a statewide lodging tax of 5%, municipalities can levy an additional 2% to 7%. These are in lieu of state and local sales taxes

Rental cars: 5%, plus sales tax.

Taxes On Wireless Service

8.98%

Inheritance and Estate Taxes

Iowa's inheritance tax ranges from 0% to 15%, depending on the amount of the inheritance and the relationship of the recipient to the decedent, with these exceptions: No tax is due on property left to a surviving spouse, stepchildren, lineal descendants (children, grandchildren, etc.) or lineal ascendants (parents, grandparents, etc.), and no tax is due if the estate’s net value is less than $25,000.